The following article was originally featured in the June 2016 edition of Insider. https://www.brownejacobson.com/training-and-resources/resources/legal-updates/2016/04/the-realities-of-austerity-and-devolution

1. 28 insider JUNE 2016
KATIE TROUT
DIRECTOR, GREATER BIRMINGHAM
& SOLIHULL LOCAL ENTERPRISE
PARTNERSHIP
There’s a lot of confusion about names
and bodies. Put simply, the West Midlands
combined Authority is a statutory body
covering Birmingham, the Black Country,
Coventry and Solihull, which will have powers
and funding devolved down to it.
The Strategic Economic Plans (SEPs) were
created by each local enterprise partnership
(LEP) to set the vision for an area, some key
performance indicators and how to reach
the goals, and intervention that would be
ANN LUCAS
LEADER, COVENTRY CITY COUNCIL
The Midlands is underperforming as regards
productivity, and we have a promised the
government that, if it gives us the power,
responsibility and fiscal tools, we will do the
job for them.
The seven leaders of the various councils
in the West Midlands Combined Authority
(WMCA) decided to put aside party differ-
ences and work for the economic benefit of
the region, partly because the government
funding we were used to receiving had gone
forever. The headline figures include about
£40m of infrastructure finance a year to the
WMCA over 30 years, which is about £1bn –
the largest deal for any combined authority,
including Manchester.
All this is a start, and in the same way that
Manchester has gone back and back again
for more, so will we. These are baby steps –
we need to show that we’re growing before
government will give us more.
All the politicians involved in this recognise
the importance of our individual towns and
cities, and the need to deliver something
local. But in the business world we have
to think across borders, to get into a new
mindset. The WMCA will have a combined
population of 4.5 million: Mexico City’s is 22
million, so we have to get real and appreciate
that, to compete in the real world, me arguing
for just my 330,000 voters in Coventry won’t
cut it.
That’s where the Dynamic Economic
Impact Model we’re developing is so
important. We will feed in criteria, and out will
come answers such as “you need to put that
development there”.
It will show where best to use resources
such as transport, regeneration, skills, inno-
vation, and come up with the programmes
and packaging needed to win investment.
The model is a step above what’s been done
elsewhere in Britain.
WinningcombinationIN OUR FIRST BREAKFAST EVENT INSIDER GATHERED BUSINESS AND POLITICAL LEADERS
FROM THE WEST MIDLANDS TO LOOK ATTHE IMPACT OF DEVOLUTION, THE WEST MIDLANDS
COMBINED AUTHORITY AND MIDLANDS ENGINE ON THE ECONOMY
WEST MIDLANDS DEVOLUTION BREAKFAST
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2. insider JUNE 2016 29
ambitions are to the business community.
What differentiates the WMCA from other de-
volved authorities is that this is a partnership
between councils and business, rather than
being led solely by local authorities.
We didn’t have many teething problems in
setting this up: we had grown-up conver-
sations where we each acknowledged our
strengths and weaknesses. So in the Black
Country we’ve recognised that supply chains
know no boundaries, that businesses need
to move goods, people need to get to work
and investors come in across that broader
geography. We’ve realised that we can’t
handle our issues alone.
So one of our challenges is to boost the
skills of our workforce: if you look at average
wages in the combined authority, we’re
£4,000 short of where we should be. This is
where working together comes in: the Black
Country may have only one university, but by
working collectively we can access 27 across
the region. But we have to ensure
that businesses know where they are and
that they can tap into them.
And through collaboration we can also
handle productivity challenges. The Black
Country must move from a low to a highly
skilled economy.
For example, HS2 is coming to Birming-
ham, but the skills and supply chain needed
to respond to such a big opportunity is
something we need to work on across the
region.
needed. We felt, with the combined authority,
the three LEPS involved should create a
combined plan looking at sharing issues
such as advanced manufacturing and skills,
and areas of strategic importance, such as
promoting life sciences.
The Midlands Engine, meanwhile, is a
much looser partnership covering a larger
geography of 11 LEPs, 86 local authorities
and 27 universities. It’s best thought of as a
brand on which you can hang things, a more
informal structure, with no mayor. It won’t set
strategic economic plans, but will set a series
of themes and partnerships that will work
across the East, West and South Midlands.
A good example is Midlands Connect, which
will look at the transport investment needed
across the region and how best to move
people and get goods to market.
The Midlands Engine will also look at ac-
cess to business finance: in the Budget there
was the announcement of a £250m fund
of funds for the Midlands Engine, looking a
debt, equity and micro-finance. By East and
West working together we got an additional
£50m on top of what we would have had
working alone.
The Engine will also look at investment
and promoting the region: it’s working with
UKTrade & Investment (the government’s
international trade body) on that: at the prop-
erty expo MIPIM in March, we launched the
Midlands Engine Pitchbook, which brought
a series of investible propositions from those
11 LEPs into a single document, which we
can take across the world and promote.
HENRIETTA BREALEY
DIRECTOR OF POLICY AND STRATEGIC
RELATIONSHIPS, GREATER BIRMINGHAM
CHAMBERS OF COMMERCE
Devolution is about scale: the Chancellor
has made it clear that he sees combined
authorities as the only game in town if
you want to attract additional funding and
support. The speed and the way in which
the seven local authorities in the WMCA
have come together in just a year has been
nothing short of phenomenal.
The advantage of scale is that, instead of
individual local authorities going to govern-
ment and saying “we need” with parochial
mindsets and expecting Whitehall to sort it
out, the WMCA can make the case for an
economic area of four million people and
three LEPs.
There is more to do on business
engagement: there is still a lot of confusion
among businesses about how they can get
involved, and at what level.
From 2017 there will be an elected mayor
able to raise the business rate supplement to
fund infrastructure. This has worked
elsewhere – the Mayor of London raised it
by 2p on properties over a certain value to
fund Crossrail – but it’s wrong if the first time
a business sees an extra tax is on its bill.
There really does need to be a communica-
tions exercise if they are to foist an extra tax
on business.
SARAH MIDDLETON
CHIEF EXECUTIVE,
BLACK COUNTRY CONSORTIUM
One of the glues that will hold the WMCA
area together is by explaining what the
“The WMCA is a
partnership. We’ve
realised that we
can’t handle our
issues alone.”
SARAH MIDDLETON
SPONSORED BY HOSTED BY
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3. 30 insider JUNE 2016
the region is constrained in in its efficiency
because the transport system isn’t good
enough. So instead of businesses working
with what’s effectively Greater Birmingham,
better transport creates prospects across the
Midlands, a regional economy worth £220bn.
We need a consensus about how we pool
our resources on this.
One thing that’s rarely looked at is disparity
of investment in transport in Britain. London’s
economy would have ground to a halt long
ago if it had received the same low levels
of investment in transport that the Midlands
gets; businesses would be moving out.
London is serving itself with the amount of
national taxes it gets in infrastructure invest-
ment. In the Midlands, we would have had
more transport spend had Boris Johnson not
been so successful in attracting national tax
spend to London.
BILL MCELORY
LEAD FOR DEVOLUTION,
TURNER & TOWNSEND
London is our big office globally, because
it has connectivity: we can get people in,
around and they can live outside, and that
attracts investors. It becomes a self-per-
petuating machine. One of the reasons we
kept an office in the Midlands is because
we thought the day would come when it
and other large conurbations would see the
LAURA SHOAF
STRATEGIC DIRECTOR FOR TRANSPORT,
WEST INTEGRATED TRANSPORT AUTHORITY
Over the past few years we’ve seen a
wholesale change in the way that transport is
perceived; recognition that it enables growth,
so people can access training, education
leisure, social justice. Getting a transport
strategy and deal pushes the region ahead
of other parts of the country.
The West Midlands Integrated Transport
Authority (ITA) has been working on transport
for the past two years. We have a huge job
over the next ten years, to get people across
and through the conurbation, and it will be
done mainly through two initiatives, Midlands
Connect and the combined authority.
Midlands Connect is one of the corner-
stones of Midlands Engine. It’s about scale,
how people get from Wolverhampton to
Nottingham in less than the two-and-a-half
hours, how we link goods to ports and air-
ports, and how we support the supply chain
and the Golden Triangle.
The second initiative is the WMCA, which
will receive significant investment in transport
as part of the devolution deal. In that we have
huge ambitions, how we maximise the op-
portunities of HS2 and connect everyone to
it – by bus, rail, road, metro, cycle – and how
we move people through the conurbation
during a disruptive period of construction.
HS2 will mean the region is less than 40
minutes from central London: it’ll be faster
to get here than to cross the capital, so
we need to decide what our role will be in
responding to the pressures on London and
the South East, which will help us make the
case for additional investment.
SIMON COLLINSON
DEAN AND PROFESSOR OF INTERNATIONAL
BUSINESS AND INNOVATION, BIRMINGHAM
BUSINESS SCHOOL
There are five elements to the Midlands
Engine prospectus: skills, innovation, trans-
port, business finance and promotion. But
at the heart of it all is raising the average
worker’s gross value added. At the moment
we are at £46,000 per worker. Manchester
is not that far ahead, at £49,000, but we’re
£7,000 below the UK average. That’s partly
because the UK is so skewed by high-value
jobs in London and the South East, where
it’s £70,000 per worker. This is a 30-year
challenge, to lift us slightly above that level,
and in response to that is to get some level
of devolved powers and finance.
Transport is key because it pulls the whole
thing together and increases opportunity.
Businesses ignore boundaries: supply chains
to our biggest companies, on which we’re
particularly reliant, go across the region. But
“We need transport
infrastructure that
attracts the sort of
people who will be
building businesses
in 20 years.”
BILL MCELORY
WEST MIDLANDS DEVOLUTION BREAKFAST
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4. insider JUNE 2016 31
months, BA has come back as Oneworld and
we have had 20 per cent growth in long haul.
But it’s not enough. Many people still leave
the region to fly from Heathrow or Manches-
ter, particularly for long haul. If we could keep
those passengers and routes here the extra
benefit to the region would be £500m a year.
The airport should be bigger than the 10
million passengers it serves, but our proximity
to London has been a challenge as airlines
are unlikely to fly to the same destinations
from both, while Manchester has that advan-
tage of being a bit further from the capital.
But the tables are turning – Heathrow is
effectively full and the likelihood of it getting
a new runway are next 15 years is challeng-
ing, so Birmingham is the next best option
for people who need long-haul connectivity.
And that’s before we talk about the poten-
tial of HS2. We need an airport that’s integrat-
ed into the plans for HS2, for the benefit of
the Midlands Engine. The real challenge
isn’t just to build high-speed rail, but to
integrate it: let’s be ambitious, say, with an
HS2 station that is an airport terminal, where
you can check in and leave your luggage, as
there is in Hong Kong.
benefits of taking the London model and
create masterplans for transport, housing
and regeneration. That’s what we’re seeing
now in the West Midlands.
We’ve been working hard on the devolu-
tion agenda. We have to support Midlands
Connect, because without connectivity the
Midlands Engine project does not work. We
also need to attract future businesses, those
we don’t even know exist. We have to build
the sort of transport infrastructure that will
attract the sorts of people who will be build-
ing businesses in 20 years.
PETER WARE
PARTNER AND THOUGHT LEADER ON
DEVOLUTION, BROWNE JACOBSON
Local government in Britain is complex: if
you ask someone what their council does for
them, one will say bins, another local parks,
another mental health – that could be three
councils. They just want to know it works.
The challenges for any combined authority
will be transparency; allowing businesses to
know which port of call they need to go to
for information and decisions. Manchester is
ahead of that game: it’s easy there to know
who’s responsible for what.
But we do need public buy-in. Devolution
is a fantastic opportunity – local government
has got it, but I remain to be convinced that
national government has got it. It’s a cliché
that we are the most centralised state out-
side North Korea, and the natural tendency
for Whitehall is to pull power to the centre.
Devolution needs to work: it will look
different in different places. What works in
Manchester will not work in the Midlands.
Looking at the skills agenda, it’s complex
because you have a centralising state with
on educational issues, but a genuine need
to address skills issues locally. What is often
forgotten is how good local government is:
it has faced huge cuts to budgets in the
past five years but it is still functioning.
JO LLOYD
COMMERCIAL DIRECTOR,
BIRMINGHAM AIRPORT
Birmingham Airport is incredibly important to
the Midlands Engine: it’s worth £1.1bn to the
regional economy every year. It’s a shared
asset, and although people fly to Birming-
ham, it stands in for the Midlands Engine
region – people from Beijing don’t under-
stand the different authorities.
It is doing well: we have seen double-
digit growth in new airlines over the past 12
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